It’s the issue that has rocketed to the top of the charts: inflation is back.
I would not have written this even a week ago, but I now think that Pres. Joe Biden’s Build Back Better plan should be scaled way back from its current $1.75 trillion iteration. Inflation is now the biggest issue threatening Biden’s Democratic majorities in Congress. Things were already looking grim for his party, but there was a slim chance that, if the economy got back on track and supply chains got straightened out in time, maybe the Dems could defy political gravity. With this week’s inflation numbers (the worst since 1990) getting it under control has to now become the new priority.
Some of the issue is, in fact, the supply chain. But some of it is due to the over-large $1.9 trillion stimulus package passed earlier this year. I opined here more than once that I thought it was unnecessarily large, but the hard-left became fixated on the $1.9 trillion price tag, as if anything less would leave children selling matches and apples in the streets.
Now, we’re paying the price for the over-spending, literally. And it’s not just me saying so. Jason Furman, an economic advisor to Pres. Barack Obama, thinks we went too far. Here’s an excerpt from an Associated Press story from this morning:
Furman suggested, though, that misguided policy played a role, too. Policymakers were so intent on staving off an economic collapse that they “systematically underestimated inflation,” he said. “They poured kerosene on the fire.”
A flood of government spending — including President Joe Biden’s $1.9 trillion coronavirus relief package, with its $1,400 checks to most households in March — overstimulated the economy, Furman said.
“Inflation is a lot higher in the United States than it is in Europe,” he noted. “Europe is going through the same supply shocks as the United States is, the same supply chain issues. But they didn’t do nearly as much stimulus.”
(My emphasis added.)
So, if that’s the case, do you really want to add another bucket of kerosene right now?
By scaling way back, Democrats could accomplish another important political goal: clarity. Polls show that few Americans know anything about their bill beyond its big price tag. It was a mistake from the start to toss so much stuff into it. By teasing out just a few things, voters would know what they were getting, not just what it will cost.
My candidate for the One Thing, if it had to come down to that, would be to make the child tax credit permanent. This provision, which was part of that stimulus bill, is projected to cut childhood poverty in half. And it’s a tax cut, not an increase. And making it permanent won’t make inflation any worse because it’s already in place. It’s just scheduled to expire after next year.
Look, I’ve written several times that I supported everything in the original $3.5 trillion Biden plan. I do. But it’s important to be realistic about what you can get past Joe Manchin and the moderates. And, now with these inflation numbers, it’s important to readjust to rapidly changing political reality yet again.
Right now small has become beautiful.
Welcome to the 268th day of consecutive posts here at YSDA. Thanks for reading!
4 thoughts on “Build Back Smaller”
I’m worried I might be venturing into conspiracy territory with the way I’ve been thinking about inflation. I keep thinking about Carter’s presidency and the inflation then. The media narratives then and now seem eerily similar. Could it be that those that set prices might use prices as a weapon against politics they disagree with? Might brokers find economic opportunity in supply chain disruptions, working to increase the value of their holdings by keeping supply down on purpose? If there are such dire inflationary signals, why is the stock market so high?
We all often think of our economy like a type of god, the invisible hand, that we can’t anger or it will take vengeance. I like to remind myself that it is comprised of people, not gods. Those people do indeed get angry when the “returns on investments” don’t “meet expectations”. I also like to remind myself that the financial sector of our economy, whom are the ones actually in control of things like prices and interest rates far more than the government is, doesn’t itself really produce tangible productive value. It directs the productive capacity and takes a pretty hefty fee for doing so. When they do well they take additional fees. When they do poorly they take bailouts and shift blame to the government. They’re doing poorly right now – they are supposed to serve and support productive enterprise, not the other way around.
No media is allowed to say any of this unless they don’t take corporate money. It doesn’t even need to be a written rule, the language doesn’t even exist in the business journalism universe to state these ideas. That’s the beauty of controlling language and media. Remember there really isn’t a liberal media – no “liberal” outlet can begin to say these ideas.
I believe Joe Manchin is obviously a DINO and needs to either declare his true nature as a Conservative or get the hell out of politics altogether. But you are correct… they tried to do too much at once … and they are still at it by their egregious over-support for the lost cause in Ukraine. Still whatever they do is far better than what will be done if the Radical Right gains power in 2024 and moves us a step more toward fascism.